E-Sourcing Forum » Use e-Sourcing to combat Global Sourcing Supply Risks

Use e-Sourcing to combat Global Sourcing Supply Risks

February 7th, 2007 at 05:52am David Bush - Iasta

Back in October, Rob Parrish had a great post over on Riskape that outlined the top 10 factors to consider when sourcing globally. This post was very enlightening as it opens your eyes to not only how risky global sourcing can be but why you should be using e-Sourcing tools to help you manage the process. To help you understand how e-Sourcing helps, I’m going to address each of the risks separately.

Landed Cost
Your eRFP can be set up to capture unit & freight & other costs and your e-Optimization tool can then take all of these costs into account when making an award decision.

Product Quality
Your e-Inventory system can be used to track information about shipments, which can then be queried during the next sourcing cycle. If you find that one of your suppliers had a defect rate of over 100 parts per million, you know they have issues with quality and you can penalize them appropriately in your e-Auction or e-Optimization scenarios by noting that you will have to pay more per unit, by ordering extra parts, to ensure supply.

Logistics Capability
Your e-RFP can include a logistics section and you can ask vendors to detail both their shipping methods, associated costs, and number of routes available. If one vendor only ships air, and only from one airport with one carrier - that’s risky!

Location
You can capture complete plant location information in an e-RFP and then use simple online mapping tools to determine how far the supplier’s closest plant is from each of your receiving locations.

(Local) Trade Regulations
You can capture not only relevant regulations in appropriately defined compliance section of an e-RFP, but also estimated costs to help you make your decisions.

Finances
A good e-RFP tool will allow you to collect supplier financial statements under attachments and provide them with an NDA that you agree to in the collection of such information.

Time to Market / Supplier Responsiveness
Your e-Inventory system captures delivery information, and a summary thereof can be loaded into your e-Contract Management / e-Compliance system on a regular basis to help you track and measure supplier responsiveness during the contract to correct, and fix, problems before they start.

Value Added Services
You can specify which value added services are appropriate to you in an e-RFP and force suppliers to bid in an apples-to-apples manner that will allow you to easily and effectively compare RFPs.

Communication / IT Services
You can provide your suppliers access to a supplier portal and gauge their IT ability through their ability to connect and collaborate with you through this portal, as well as have them specify their infrastructure capabilities in an e-RFP.

Human Toll
It’s especially important to use common, written, language in cross-cultural dealings. At least a written word cannot be misheard - and you can add to and clarify an on-demand e-RFP as suppliers ask questions during the RFP process!

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Entry Filed under: Functionality, General, Global Supply Issues/Risk, Supply Management Best Practices, Technology, e-RFx

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